Myth: 401(k)s enable employees to save significantly more than traditional pensions.
Reality: In 2004, the median 401(k) balance for heads of household aged 55–64 was $60,000. This amount would generate less than $400 a month. Similarly, workers aged 45–54 were not on track to have enough retirement savings.

—“401(k) Plans Are Still Coming Up Short,” Alicia H. Munnell and Annika Sundén, Center for Retirement Research at Boston College, March 2006

Myth: 401(k)s produce higher returns for participants than traditional pensions.
Reality: From 1988 to 2004, traditional plans outperformed 401(k) plans by 1 percentage point thanks in part to lower investment management fees.

Myth: Most employees diversify their 401(k) investments.
Reality: A majority of participants are not diversified at all and face the risk of not having enough retirement income or having large swings in the value of their assets.

—“Investment Returns: Defined Benefit vs. 401(k) Plans,” Alicia H. Munnell, Mauricio Soto, Jerilyn Libby, and John Prinzivalli, Center for Retirement Research at Boston College, September 2006